April 2011

04/06/2011

Economists long ago tried to justify the vast inequalities that seemed so troubling in the mid-19th century—inequalities that are but a pale shadow of what we are seeing in America today. The justification they came up with was called “marginal-productivity theory.” In a nutshell, this theory associated higher incomes with higher productivity and a greater contribution to society. It is a theory that has always been cherished by the rich. Evidence for its validity, however, remains thin.

The corporate executives who helped bring on the recession of the past three years—whose contribution to our society, and to their own companies, has been massively negative—went on to receive large bonuses. In some cases, companies were so embarrassed about calling such rewards “performance bonuses” that they felt compelled to change the name to “retention bonuses” (even if the only thing being retained was bad performance). Those who have contributed great positive innovations to our society, from the pioneers of genetic understanding to the pioneers of the Information Age, have received a pittance compared with those responsible for the financial innovations that brought our global economy to the brink of ruin.

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Inequality massively distorts our foreign policy. The top 1 percent rarely serve in the military—the reality is that the “all-volunteer” army does not pay enough to attract their sons and daughters, and patriotism goes only so far. Plus, the wealthiest class feels no pinch from higher taxes when the nation goes to war: borrowed money will pay for all that.

Foreign policy, by definition, is about the balancing of national interests and national resources. With the top 1 percent in charge, and paying no price, the notion of balance and restraint goes out the window. There is no limit to the adventures we can undertake; corporations and contractors stand only to gain.

Inequality and warfare have always been two sides of the same gold sovereign: kings waged war for lands for which poor subjects bled, then worked upon for feudal fat cats. The old Divine Right of Kings really isn't that much different than our contemporary Permanent War Economy.

At the end of his article, Stiglitz refers to de Tocqueville's notion of “self-interest properly understood." The flip side of this is described near the end of Democracy in America:

I seek to trace the novel features under which despotism may appear in the world. The first thing that strikes the observation is an innumerable multitude of men, all equal and alike, incessantly endeavoring to procure the petty and paltry pleasures with which they glut their lives. Each of them, living apart, is as a stranger to the fate of all the rest; his children and his private friends constitute to him the whole of mankind. As for the rest of his fellow citizens, he is close to them, but he does not see them; he touches them, but he does not feel them; he exists only in himself and for himself alone; and if his kindred still remain to him, he may be said at any rate to have lost his country.

Worshippers of Galt, who earnestly believe they never benefited from society and think the commonwealth enslaves them, are both a symptom and cause of our decline--part of a feedback loop. They are counterexamples of de Tocqueville, the antithesis of enlightened, or at least pragmatic, individualism exemplified by the likes of Henry Ford or even Adam Smith.

But they're easy to pick on, what with their obvious and extreme embrace of the virtue of selfishness. What about the rest of us who enjoy an oil-based, consumerist society, albeit to a lesser extent than our wealthy masters?

There's something very important that a lot of people, right and left, have really failed to recognize as they cheer on their preferred military conflicts, whatever the noble cause may be. They forget that James Madison identified the greatest threat to our liberty:

Of all the enemies to public liberty, war is, perhaps, the most to be dreaded, because it comprises and develops the germ of every other. War is the parent of armies; from these proceed debts and taxes; and armies, and debts, and taxes are the known instruments for bringing the many under the domination of the few. In war, too, the discretionary power of the Executive is extended; its influence in dealing out offices, honors, and emoluments is multiplied; and all the means of seducing the minds are added to those of subduing the force of the people. The same malignant aspect in republicanism may be traced in the inequality of fortunes and the opportunities of fraud growing out of a state of war, and in the degeneracy of manners and of morals engendered by both. No nation could reserve its freedom in the midst of continual warfare.

Isn't it a vicious cycle, wherein inequality enables war and war generates more inequality? Thus, cheering for an intervention such as in Libya is essentially cheering for greater inequality at home. Every Tomahawk launched will be replaced by our PWE, and the new royalty/aristocracy will reap more profits while government by the rich squeezes the middle class and poor even more.

We must rapidly begin the shift from a thing-oriented society to a person-oriented society. When machines and computers, profit motives and property rights, are considered more important than people, the giant triplets of racism, extreme materialism, and militarism are incapable of being conquered.

Rebelling against the Divine Right of the Koch Brothers requires a revolution of values within ourselves. There are many reasons they are as ascendent today as the Robber Barons of the 19th century or the feudal barons of the 10th, but one that's overlooked is supporting "good" wars when our guy is in office because it makes the next "bad" war easier, which helps the gulf between rich and poor grow here at home and abroad. The "good" wars are a threat to liberty worldwide.

By all means, let's lay blame at the feet of our new kings. But let's not let's not forget our own divine rights and responsibilities in the fight for justice.

I don't suggest everybody puts on loincloths and start producing their own goat's milk, or even necessarily giving up their cars and Wii Fits. My proposal is more modest today: just tell Mr Obama you don't support his war. We can fill in the rest of the details later.